China-based consumer electronics firm Xiaomi, known for its Apple ( AAPL ) copycat smartphones, has come out with a low-cost flying camera drone that could shake up the nascent market. On Wednesday, Xiaomi, roughly pronounced “show me,” introduced its first drone, the Mi Drone, which costs about $380 for the entry-level model with a 1080p camera. A higher-end model with a 4K camera costs about $450. The Xiaomi drones will be sold in China, at least initially, TechCrunch reported . Camera drones from market leader DJI start at $500, with 4K drones starting at $800. And those prices are after recent discounts. Action camera maker GoPro ( GPRO ) is expected to enter the drone market in time for the holiday shopping season. Pricing has not been announced for its Karma drones. U.S. Drone Sales Skyrocketing Retail tracker NPD Group reported Wednesday that drone sales in the U.S. have grown 224% year over year to nearly $200 million in the 12 months ending in April. Drones with 4K cameras accounted for more than one-third of dollar sales in that period, while drones with built-in GPS accounted for 64% of revenue. The average drone sold for more than $550 in April, NPD said. “It’s not surprising that drones were highly sought after during last year’s holiday season,” NPD analyst Ben Arnold said in a statement. “But even after the holidays, NPD’s consumer research indicates drone purchase expectations remain high, especially among younger consumers. This points to continued growth and healthy demand for the category.” China-based DJI was the top U.S. drone vendor in terms of dollar sales. French company Parrot was second, followed by Protocol, Yuneec and 3D Robotics, NPD said. RELATED: Red Bull Gives GoPro Wings, But Camera Maker Still Low-Flier Drone Market Positive For AeroVironment, Not GoPro, Piper Says
GoPro ( GPRO ) stock soared as much as 8.9% Tuesday, after the maker of wearable action cameras announced a multiyear global partnership with energy drink maker Red Bull. GoPro stock was up 5%, near 9.75, in late-afternoon trading on the stock market today . But the stock is still down 46% this year, and it has a lowest-possible IBD Relative Strength Rating of 1, meaning it’s in the bottom 1% of stocks for performance in the past 12 months. The partnership includes content production, distribution, cross-promotion and product innovation, the companies said in a press release . As part of the deal, privately held Red Bull will receive equity in GoPro, and GoPro will become Red Bull’s exclusive provider of point-of-view imaging technology for capturing video during Red Bull sporting events and media productions. “This partnership is very strategic for GoPro,” GoPro founder and CEO Nick Woodman said in a statement. “While we’ve worked closely for many years, as official partners we’ll be able to more effectively help one another execute our shared vision and scale our respective businesses.” GoPro went public at a price of 24 in June 2014 and reached as high as 98.47 in October 2014. But shares have fallen on declining sales and concerns about market saturation and lower-cost competition in the action camera market. Red Bull will receive less than 1% equity in GoPro, or about 1 million shares, Piper Jaffray analyst Erinn Murphy said in a research report. “While this extends the consumer impressions of the brand globally, we believe GoPro still is battling some challenges with reinvigorating unit sales of its capture devices,” Murphy said. “On the heels of the delayed drone launch, tepid consumer demand for action camera products over the last few quarters and a soft Q2 guide from Best Buy ( BBY ) this morning (14% of GoPro sales), we are maintaining our underweight rating” on GoPro. GoPro’s partnership with Red Bull will run for 3-1/2 years. As an exclusive partner, GoPro also will become Red Bull’s aerial camera partner, a role previously filled by drone competitor DJI, Murphy said. GoPro is scheduled to launch its Karma flying-camera drone in time for the holiday shopping season. Chinese consumer electronics manufacturer Xiaomi is expected to introduce its first drone on Wednesday. Xiaomi’s Mi Drone is expected to cost about $610, more than 20% below a comparable product from market leader DJI, Bloomberg reported Tuesday . The Mi Drone also will record ultra high-resolution 4K video. RELATED: Best Buy Latest Retailer To Disappoint, Gives Soft Profit Outlook Drone Market Positive For AeroVironment, Not GoPro, Piper Says .
The commercial drone industry is taking off and is likely to get a big lift once the Federal Aviation Administration completes its regulations for small unmanned aerial systems by late spring, Piper Jaffray said in a research report Monday. The buzz was positive at the Xponential 2016 conference, sponsored by the Association for Unmanned Vehicle Systems International and held May 2-5 in New Orleans, Piper Jaffray analyst Troy Jensen said. The annual event is the largest drone trade show in North America. “Following conversations with the leading companies in the space, our biggest takeaway was demand for drone hardware, software and services continues to inflect, as more and more companies are realizing the value this still-emerging technology can add,” Jensen said. “We were also very encouraged to hear most in the industry are confident the FAA will release the long-awaited small UAS ruling by ‘late spring.’ “That said, we continue to believe we are in the early innings of a multibillion-dollar market opportunity, and expect the industry to see a bigger inflection once favorable regulation is put in place.” Historically, the Xponential trade show has focused on military applications for drones, but the fast-growing commercial drone industry has shifted the focus of the show to enterprise applications. Companies at the show included Aerialtronics, AeroVironment ( AVAV ), Aeryon Labs, Agribotix, AirRobot, Airware, DJI, DraganFly Innovations, Kespry, MicaSense, PrecisionHawk and Pulse Aerospace. Of those, only AeroVironment of Monrovia, Calif., is publicly traded. Jensen rates AeroVironment stock overweight, with a price target of 36. AeroVironment stock fell 1.3% to 28.11 on the stock market today . “Although revenue levels for most drone companies remain sub-$10 million on an annual basis, we were told by more than one company they have recorded more revenues in Q1 than they did in all of 2015,” Jensen said. 2.7 Million Commercial Drones Expected By 2020 The FAA estimates that annual sales of drones for commercial purposes will grow from 600,000 in 2016 to 2.7 million by 2020, he said. Amazon.com ( AMZN ) is among companies experimenting with using drones for delivering products to customers, but many hurdles remain and it’s too early to say when this might become a reality. The FAA’s small UAS regulations are expected to allow drones weighing under 55 pounds to fly commercially without having to file for certain exemptions. The rules should make it easier and faster for businesses to fly drones for most applications, Jensen said. Meanwhile, the FAA predicts that sales of consumer drones for hobbyists will grow from 1.9 million in 2016 to as many as 4.3 million in 2020. The consumer drone market, however, has become highly competitive, with aggressive price competition. China-based DJI is the leader in the consumer drone market. Piper is aware of two companies that intended to release a consumer drone in 2016 but decided to delay their product launch or not go forward because the market opportunity is not as lucrative as it was before, Jensen said. In addition to those two companies, action-camera maker GoPro ( GPRO ) last week announced that it is delaying the release of its Karma drone from Q2 until the holiday shopping season. Piper analyst Erinn Murphy on Monday reiterated her underweight rating on GoPro stock, with a price target of 6.50. GoPro stock tumbled 6.6% to 9.77 on Monday. That’s its lowest price in nearly three months and is close to its all-time low of 9.01, reached on Feb. 4. “We believe companies such as GoPro who have yet to launch a consumer drone could have a tough time, because as many category leaders have already found (DJI, Parrot etc.), developing a drone autopilot is not easy and typically takes second- and even third-generation models to develop a bug-free drone,” Murphy said. “At the time GoPro launches its drone this holiday, we are concerned that pricing could be an issue given how competitive pricing has already been for its major peers.” Piper’s Jensen says the drone market is likely to see a lot of consolidation over the next couple of years. “This consolidation will include bigger companies, not in the market today, acquiring already established players in order to take advantage of the growing market opportunity, as well as smaller companies merging in order to penetrate different areas of the market,” he said. “Over that same time period, we also believe new companies will be entering the market and private equity money will continue to flow in.” RELATED: Drone Delay Bad Karma For GoPro; Stock Skids On Q1 Report